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Intel is nearing a deal to sell its Altera chip unit to private equity group Silver Lake as the semiconductor pioneer works to raise cash and catch up with rivals like Nvidia in the manufacture of chips for use in artificial intelligence.
Silver Lake will buy a majority stake in Altera, which makes programmable chips that tech companies can tailor to their AI needs, at a valuation of about $9bn, according to two people briefed on the matter.
Intel, which for months has been in talks to sell the unit as part of a broader plan to divest non-core assets, will continue to own a large minority equity stake.
Earlier this year, Intel entered exclusive negotiations with Silver Lake after deciding the private equity group had a workable plan for a turnaround of Altera that would increase its value.
Ken Hao, Silver Lake’s chair, is leading the buyout group’s deal and is considered one of the private equity industry’s most knowledgeable investors in semiconductors. Two decades ago, Hao helped create the predecessor to what is now chip giant Broadcom by carving out a semiconductor business from Hewlett-Packard.
Intel acquired Altera for about $17bn in 2015. Intel has previously told shareholders a stake sale would boost the chipmaker’s value and set the stage for a full exit.
While Intel and Silver Lake plan to announce their deal in coming days, talks are ongoing and could still fail to lead to a deal, the people said.
Intel is working quickly to shed non-core assets and bulk up its finances to invest billions of dollars in modern chip fabrication plants in the US and Europe. It announced the spin off of its venture capital arm, Intel Capital, in January.
The asset sale is part of a broader planned restructuring that comes as President Donald Trump looks at ways to revive the fortunes of Intel, one of the architects of modern day Silicon Valley.
Intel is in talks with the administration on a partnership with industry leader Taiwan Semiconductor Manufacturing Company, the FT previously reported.
The company began a big cost-cutting effort last summer, slashing thousands of jobs and halting manufacturing projects in Europe as its chip “foundry” business ran at a multibillion-dollar loss.
In December, Intel’s board ousted chief executive Pat Gelsinger amid concerns the chipmaker wasn’t moving quickly enough to catch up to rivals like Nvidia and AMD. Veteran investor and former Cadence chief executive Lip-Bu Tan took over the role last month.
The company’s financial troubles have alarmed Washington because Intel is the only US chipmaker that can manufacture high end chips.
Additional reporting by Michael Acton in San Francisco
